The Chaikin Money Flow (CMF) indicator, developed by Marc Chaikin, measures buying and selling pressure over a selected period (commonly 21 days). It combines price and volume to determine whether an asset is being accumulated (bought) or distributed (sold). By identifying shifts in money flow, traders can anticipate potential price reversals or trend continuations early.
The CMF indicator for MT4 can be used on any currency pair and any timeframe.
The CMF indicator is built upon the idea that:
When the market is strong, prices tend to close near the upper half of their daily range.
When the market is weak, prices tend to close near the lower half of the range.
Because of this, the indicator oscillates between +1 and -1:
Positive CMF values → Buying pressure (accumulation)
Negative CMF values → Selling pressure (distribution)
The CMF rises when price closes nearer to the high of the session and volume supports the move.
The CMF falls when price closes nearer to the low of the session with supporting volume.
A buy signal occurs when:
The indicator value is above the zero line (positive territory).
The CMF value is increasing along with rising prices.
This indicates strong buying pressure and accumulation, suggesting a continuation of the uptrend.
A sell signal occurs when:
The CMF value falls below the zero line (negative territory).
The indicator decreases along with declining prices.
This signals increasing selling pressure, consistent with a downtrend or distribution.
In the chart (EUR/USD, H4), the red circle shows the CMF moving from positive to negative as prices fall. Candlesticks close near session lows, indicating strong bearish pressure.
During uptrends, shown by the green circle, the CMF moves into positive territory. Price closes near session highs, signaling increasing buying pressure.
The indicator often peaks as price approaches significant resistance zones.
The Chaikin Money Flow indicator is a powerful tool for identifying:
Trend strength
Accumulation vs. distribution
Potential early reversals
As with all indicators, CMF works best when combined with other technical tools and confluence-based strategies. It is freely available for MT4 and easy to integrate into trend-based trading systems.
Published:
Dec 01, 2025 00:32 AM
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